Village receives a favorable audit results from financial advisor

January 2, 2013

WESTFIELD - The most recent financial audit for the Village of Westfield shows the municipality is in "good shape."

Laura Landers, MPA/CPA with Freed Maxick, reported to the Village Board of Trustees Monday, Dec. 17 during its regular meeting the results of her audit, which captured the financial picture of the village for the fiscal year ending May 31.

Landers summarized the results as, "accurately representing the position and operation of the Village of Westfield" and considered the village to be, "in good financial condition."

In Landers' professional opinion regarding benchmarking of the village's general fund balance reserves, she prospected Westfield to be at 11 percent of current expenditures, which falls in the recommended 10 to 25 percent benchmark. Under State Comptroller expectations, a municipality is considered to be under financial stress if that percentage dips to 5 percent. However, as Village Clerk Vince Luce points out, the village has been criticized in the past for having a percentage on the higher end of the spectrum.

Landers advised the Board of Trustees to be especially cautious about always knowing what the fund balance reserve is compared to current year expenditures.

"Ten to 25 percent of the fund balance compared to the current year's expenditures is a reasonable amount to be carrying," she said. "Five percent is not recommended. The State Comptroller is now looking for trends to identify municipalities that are under 'financial stress.' If a board doesn't know whether or not it's in financial stress, it should. That is something you should know."

While Landers reported to the board she was comfortable with Westfield being at 11 percent, she advised the board and Village Treasurer Rebecca Paternosh to "look at it" in coming budgetary cycles. Luce points out that 11 percent of the total budget is the same figure the village maintained last year, but with that percentage being down it requires more scrutiny at budget time.

"You're still in the recommended range, but be aware of what that figure is and keep an eye on it," Landers said.

"The biggest thing is that we make sure our internal controls such as procurement policies, purchasing policies and following a strict budgetary process are adhered to, although it becomes more time consuming," Luce said.

With approximately $900,000 bonded out for water and sewer upgrade projects out for this budgetary year, the village is being proactive by scheduling budget workshops throughout the month of March to keep hammering at the budget.

"For several years, since Mayor (David) Carr has been our mayor, we've kept taxes at a reasonable level," Luce said. "We can't continue to operate and provide some of the comprehensive services that we offer as a municipality without being as lean as possible. And that's while any materials associated with maintaining and operating our services, such as supplies like pipe, asphalt, etcetera, continue to go up each year."

Landers further reported her audit shows the village has, "more than sufficient cash on hand to pay its current liabilities."

Her report broke down assets and expenditures for key village departments - electric, sewer and water resources - and reported, "no weaknesses or deficits" with the village's books.

"Based on what you've done in your report and taking into account the tax cap, are we in a good position for the coming year," Carr asked Landers.

Landers replied that it will depend on how much of the fund balance reserves remain and how much assets are used to offset the budget in the next budgetary cycle.

"If you use all of it, that's not good," she said.

"So what you're saying is we should tread lightly," Carr asked.

"Yes," Landers said. "Just watch your revenues and expenditures and keep a good eye on it. You have a very good financial watchdog here (referring to Paternosh)."